Getting Started with first flip

[James Masotti]

I've started looking around for a property that I can buy as my first flip. I've been reading J Scotts book on estimating rehab costs and have started building some of my own spreadsheets from his templates for estimating costs of materials and labor. I spent several hours going through Lowe's writing down the ranges for all the materials so that I can build that into my spreadsheet calculations. 

I have an LLC set up and I'm already pre-approved for financing through a hard money lender so I've got those boxes checked already as well.

I've heard a lot of people say add extra time and money to your budget on your first deal so I'm trying to use the Fix and Flip calculator on BP and plan for 270 days to buy, fix, and resell. I'm also planning to include a 10% buffer over my planned expenses...and my hard money lender requires another 10% above what I project as a cushion as well. Then I'm looking to make a $15k in profit, since I figure this is another buffer that I'd have to work with. 

I know I'm not providing specifics on a property, but I guess my question is does this seem conservative enough guideline for analyzing a first fix and flip deal? 

If I make $15k (or more by finishing earlier or coming in under budget) than great, but for my first deal I'll be pretty happy as long as I don't lose money and I learn a lot in the process. 

Thanks for your thoughts and assistance everyone!

[Jason Hern]

Hi James, looks like you are in great shape. You laid the groundwork now go make an offer on a property.

The advice I can offer based on my experience is instead of giving yourself more time to complete the project have more contingency plans. For example; when a contractor stops showing up halfway through the job make sure you have a second ready to go. Another example is, talk to an experienced realtor to find out everything that could go wrong in a transaction then come up with a few options based on those pitfalls.

It's true, you don't know what you don't know until you realize you don't know it but as long as you have some plan B's and plan C's the project will keep moving in the right direction. 

Best of luck!!!